Despite India’s assertion that it will not scale down its petroleum imports from Iran,lawmakers here have been told by a Congressional report that India is “cautious” on any expansion of energy relations with Iran.

“Since late 2010,India suggested that it was cautious about any expansion of energy relations with Iran,” the independent Congressional Research Service (CRS) said in its latest report on Iran.

Earlier this week,Indian Finance Minister Pranab Mukherjee has said in Chicago that New Delhi will not curtail its petroleum imports from Tehran despite US and European sanctions against the Islamic republic.

“It is not possible for India to take any decision to reduce the imports from Iran drastically,because among the countries which can provide the requirement of the emerging economies,Iran is an important country amongst them,” Mukherjee had said.

CRS,the independent bipartisan wing of the Congress,prepares periodic reports on issues of interest to the lawmakers.

Prepared by independent experts,these reports are not an endorsement by the Congress,but puts things in perspective from the American point of view for the lawmakers to make their own informed decisions.

“Previously,the threat of imposition of US sanctions had not dissuaded Indian firms from investing in Iranian energy projects,” said the report referring to the recent statement by the Indian Ambassador to the US,Nirupama Rao,that India’s purchase of oil from Iran has dropped in recent years.

“India appears to be moving toward the US and EU position as of early 2012. The US law sanctioning dealings with Iran’s Central Bank led Halkbank to express the view that it might not be able to continue handling payments to Iran,and Iran has asked India,as a possible solution,to try to pay for oil in Japanese yen,” the report said.

Aside from the renewed payments dispute,Indian refiners reportedly are cutting their purchases of Iranian oil in order to receive the sanctions exemption under PL 112-81 discussed above (exemption for countries that significantly reduce oil purchases from Iran),it said.

“Perhaps because of the payments difficulties,some Indian firms,including Reliance Industries Ltd,have reduced their crude oil purchases from Iran,” the report said.

CRS said India has generally been considered friendly toward Iran,and many experts were surprised when India’s central bank,in late December 2010,announced that it would no longer use a regional body,the Asian Clearing Union,to handle transactions with Iran.

The Asian Clearing Union,based in Tehran,was set up in the 1970s by the United Nations to ease commerce among Asian nations.

There have been allegations in recent years that Iran might be using the Clearing Union to handle transactions so as to avoid limitations imposed by European and other banks.

“The move complicated India’s purchases of about 350,000-400,000 barrels per day of Iranian oil,and Indian officials subsequently undertook negotiations with Iran to find an alternate mechanism to clear Indian payments for that oil and other Iranian goods.

Still,the Indian move  and the reported difficulty in agreeing to a replacement payments mechanism  appeared to signal that India was taking steps to join the US/European-led efforts to shut Iran out of the international financial system,” the report said,adding that the Indian move followed President Obama’s visit there in November 2010.

The US and other Western sanctions have been imposed on Iran’s economy over Tehran’s controversial nuclear programme.